The Claim Game

[December 20th, 2006] Before November, Portland seemed a sleepy outpost in the rush of Measure 37 claims that flooded rural and suburban Oregon after voters passed the landmark property-rights measure in 2004.

Of the 3,611 Measure 37 claims from property owners contending land-use restrictions had lowered their land values, only about 1 percent were in Portland, which has 15 percent of the state's population, according to Portland State University's Institute of Metropolitan Studies. The total compensation sought: $16 million.

But on the eve of a Dec. 4 filing deadline—after which the process for claims became more expensive—61 claims came rushing in, seeking $243 million from Portland. That's 15 times the total for the previous two years and represents about 73 percent of the city's annual discretionary budget.

And the newest claimants seeking that money—or the alternative allowed by Measure 37, to have regulations waived—aren't even sympathetic old ladies like Dorothy English. She was the then-92-year-old woman who became the property-rights measure's appealing face when she said in 2004 campaign ads that land-use restrictions kept her from splitting her 40 acres in Multnomah County among her children.

Instead, they include some of Portland's most prominent business interests.

Among them is Zidell Marine, owner of more than 30 acres in the South Waterfront district, which wants the city to remove a litany of rules or cough up $120 million. And Oregon Worsted, owner of a site for the proposed Sellwood Wal-Mart, which wants the city to roll back rules or pay $4.4 million.

"We're scrambling to try to figure out how we're going to do this," says Chris Dearth, the city's Measure 37 manager. "We're going to have to spend a lot of money that we didn't plan on.... Unfortunately, the law didn't prescribe how to value the loss, so claimants can put down whatever they want."

The claims rush happened because landowners wanted to reserve their Measure 37 rights under the earlier, less expensive claims process.

Nicholas Slinde, general counsel for JC Reeves Corp—which filed a $10 million claim over environmental rules on its property at Southeast 145th Avenue and Nehalem Street—says the company has become frustrated in its dealings with the city.

Dearth says it will require hiring two to four full-time staffers to process and respond to all the claims.

Before the recent onslaught of 61 claims, there were only six outstanding Measure 37 claims against the city. Ten had been denied, and 12 were on hold or withdrawn. Only two claims were granted, allowing a code change for the property. The city hasn't paid any claimant for a loss in property value.

Dearth says the latest salvo of claims is more complicated and expensive than before, which might prompt the city to order land appraisals to assess whether properties have actually declined in value.

"It's hard to say that they've lost value when they're much more expensive than they've ever been," he says.

Of the 61 new claims, about one-third deal with the city's billboard regulations, and the rest with environmental protections. The city's history with earlier claims has been to deny those that try to work around environmental restrictions on land. Dearth says the city has been successful in ruling that environmental protections fall under a Measure 37 exemption that protects public health and safety regulations.

But each new claim poses its own problem.

For example, Oregon Worsted's claim seeks a waiver of environmental rules, which prompts Jesse Beason, Commissioner Sam Adams' senior policy director, to note that it's likely to fail because Johnson Creek flows through the site. But Dearth says that since the claim covers other legal areas—like restrictions on drive-thrus, convenience stores and billboards—it's unclear what will happen.

Then there are claims by two cemeteries asking to roll back environmental restrictions. David Noble, executive director for one of those cemeteries, Riverview, says the nonprofit's $24.7 million claim represents lost revenue if it can't put burial lots on its undeveloped land.

That claim, like others in the new batch, looks to be a fight to the death.

"I can tell you for sure that the city is not going to capitulate," Dearth says.

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